WuXi AppTec Reports Strong Third-Quarter 2020 Results
Revenue Growth Accelerated to 35.4% Year-Over-Year to RMB 4,583 Million
Adjusted Non-IFRS Net Profit Attributable to Owners of the Company Up 44.3% Year-Over-Year to RMB 958 Million
Adjusted Diluted Non-IFRS EPS Up 37.9% YoY to RMB0.40
WuXi AppTec Year-to-Date as of September 30, 2020 Results
Revenue Up 27.3% Year-Over-Year to RMB 11,815 Million
Adjusted Non-IFRS Net Profit Attributable to Owners of the Company Up 34.4% Year-Over-Year to RMB 2,477 Million
Adjusted Diluted Non-IFRS EPS Up 32.5% YoY to RMB1.06
SHANGHAI, Oct. 29, 2020 /PRNewswire/ -- WuXi AppTec Co., Ltd. (stock code: 603259.SH / 2359.HK), a company that provides a broad portfolio of R&D and manufacturing services that enable companies in the pharmaceutical, biotech and medical device industries worldwide to advance discoveries and deliver groundbreaking treatments to patients, is pleased to announce its financial results for the third quarter and nine months ended September 30, 2020 ("Reporting Period").
This document serves purely as a summary and is not intended to provide a complete representation of the relevant matters. For further information, please refer to the 2020 third quarterly report and relevant announcements published on the websites of the Shanghai Stock Exchange (www.sse.com.cn) and the Stock Exchange of Hong Kong (www.hkexnews.hk), and the designated media for dissemination of the relevant information. Investors are advised to exercise caution and be aware of the investment risks in dealing in the shares of the Company.
All financials disclosed in this press release are prepared based on International Financial Reporting Standards (or "IFRSs").
The 2020 Third-Quarter Report of the Company has not been audited.
Third-Quarter 2020 Financial Highlights
-- Accelerated revenue growth of 35.4% year-over-year to RMB4,583 million.
- China-based laboratory services realized revenue of RMB2,338 million,
representing a YoY growth of 38.9%. Both of our drug discovery services
and laboratory testing services achieved strong growth. Our chemistry
fee for services revenue grew about 53% and our drug safety assessment
services revenue grew about 77%. - CDMO services realized revenue of
RMB1,548 million, representing a YoY growth of 54.9%. Our "Follow the
Molecule" business model continued to perform very well. - U.S.-based
laboratory services realized revenue of RMB372 million, representing a
YoY decline of 13.5%, mainly due to the impact of COVID-19 and
customers' projects delay. - Clinical research and other CRO services
realized revenue of RMB315 million, representing a YoY growth of 16.8%.
The revenue growth rate continued to improve quarter-over-quarter.
-- Gross profit grew 28.2% year-over-year to RMB1,765 million. Gross profit
margin was 38.5%, slightly lower than the 40.7% achieved in the third
quarter 2019([1]), mainly because of: (1) the impact of COVID-19 on our
U.S.-based laboratory services and clinical research services business,
(2) an increase in share-based compensation expenses.
-- Non-IFRS gross profit grew 26.9% YoY to RMB1,826 million. Non-IFRS gross
profit margin was 40.1% compared to 42.1% for the same period in 2019.
(1) The non-IFRS gross profit margin of our China-based laboratory
services and CDMO services were largely in line with that of third
quarter 2019. (2) Due to the impact of COVID-19, the non-IFRS gross
profit margin of our U.S.-based laboratory services and clinical
research and other CRO services declined.
-- Reported EBITDA down 10.4% Year-Over-Year to RMB1,035 million due to
decrease of reported net profit.
-- Adjusted EBITDA grew 24.9% Year-Over-Year to RMB1,383 million.
-- Reported net profit attributable to owners of the Company declined 8.1%
year-over-year to RMB651 million, mainly because: (1) In the third
quarter of 2020, CNY appreciated sharply against the USD. We reported a
RMB154 million net loss, due to realized and unrealized exchange loss of
the proceeds of new H-Share placement and other USD assets held by the
Company, partially offset by the gains from our foreign currency forward
contracts. In the same period last year, we reported a RMB 4 million net
gain. (2) Non-cash loss of RMB190 million from the derivative component
of our convertible bonds due to the increase of our H share price.
-- Adjusted non-IFRS net profit attributable to owners of the Company
increased strongly 44.3% year-over-year to RMB958 million.
-- Diluted EPS down 6.7% versus the same period last year while adjusted
diluted non-IFRS EPS increased strongly by 37.9%.([2])
[1] If prepared under Accounting
Standard for Business Enterprises
of PRC, the gross profit grew
28.4% year-over-year to RMB1,772
million. Gross profit margin was
38.7%, slightly lower than the
40.8% achieved in the third
quarter 2019.
[2] Gain in the fair value change
of the investment portfolio of the
company is RMB183 million in the
current period, increased by
RMB173 million compared with the
gains in fair value of RMB10
million in the same period last
year. Three months ended September
30, 2019 and three months ended
September 30, 2020, we had a
fully-diluted weighted average
share count of 2,287,273,082 and
2,351,038,288 ordinary shares,
respectively.
Year-to-Date 2020 Financial Highlights
-- Strong revenue growth of 27.3% year-over-year to RMB11,815 million. -
China-based laboratory services realized revenue of RMB6,118 million,
representing a YoY growth of 30.9%. - CDMO services realized revenue of
RMB3,710 million, representing a YoY growth of 36.5%.- U.S.-based
laboratory services realized revenue of RMB1,154 million, representing a
YoY growth of 1.2%. - Clinical research and other CRO services realized
revenue of RMB815 million, representing a YoY growth of 9.9%.
-- Gross profit grew 20.8% year-over-year to RMB4,423 million. Gross profit
margin was 37.4%.([3])
-- Non-IFRS gross profit grew 23.7% YoY to RMB4,743 million. Non-IFRS gross
profit margin was 40.1%.
-- Reported EBITDA grew 24.8% Year-Over-Year to RMB3,635 million.
-- Adjusted EBITDA grew 27.5% Year-Over-Year to RMB3,833 million.
-- Net profit attributable to owners of the Company grew 34.2%
year-over-year to RMB2,368 million.
-- Adjusted non-IFRS net profit attributable to owners of the Company grew
34.4% year-over-year to RMB2,477 million.
-- Diluted EPS increased by 34.2% versus the same period last year while
adjusted diluted non-IFRS EPS increased by 32.5%.([4])
[3] If prepared under Accounting
Standard for Business Enterprises
of PRC, the gross profit grew
21.1% year-over-year to RMB
4,440 million. Gross profit margin
was 37.6%.
[4] The gains in the fair value of
the investment portfolio of the
company is RMB1,123 million in the
first nine months, increased by
RMB1,168 million compared with the
losses in fair value of RMB 45
million in the same period last
year. Nine months ended September
30, 2019 and nine months ended
September 30, 2020, we had a
fully-diluted weighted average
share count of 2,287,319,809 and
2,318,953,908 ordinary shares,
respectively.
Business Highlights
-- For nine months ended September 30 2020, we added over 900 new
customers, increasing our active customer count to more than 4,100. Our
"long-tail" strategy and "Follow the Customer/Follow the Project/Follow
the Molecule" business model continued to perform very well. - Our
global platform continued to enable innovation worldwide. During the
reporting period, our overseas customers contributed RMB9,023 million
revenue, representing a YoY growth of 25.3%. Our China customers
contributed RMB2,792 million revenue, representing a YoY growth of
34.4%. - We continued to expand our customer base and retain existing
customers. During the reporting period, our existing customers
contributed RMB11,109 million revenue, representing a YoY growth of
29.1%. Our newly added customers contributed RMB706 million revenue. -
We continued to execute our "long-tail" strategy and increased our
support to large global pharmaceutical companies. During the reporting
period, our global "long-tail" customers and China-based customers
contributed RMB7,938 million revenue, representing a YoY growth of
28.4%. The top 20 global pharmaceutical companies contributed RMB3,877
million revenue, representing a YoY growth of 25.1%. - We continued to
increase customer conversion and enhance synergies across our platform.
During the reporting period, customers using services from more than one
of our business units contributed RMB10,164 million revenue,
representing a YoY growth of 27.1%.
-- We acquired Milestone Pharma to consolidate and expand the capacity of
our analytical testing services.
-- Target-to-Hit platform enabled 359 customers globally and realized about
RMB140 million revenue, representing a YoY growth of about 92%, which
will also create incremental business opportunities for our downstream
business units.
-- During the first nine months of 2020, our success-based drug discovery
service unit submitted IND filings for 18 new chemical entities for our
customers and obtained 20 CTAs. As of September 30, 2020, we have
cumulatively submitted 103 NCE IND filings with the National Medical
Products Administration (NMPA) for our customers and obtained 77 CTAs.
As of September 30, 2020, there is 1 project in Phase III clinical
trial, 9 projects in Phase II clinical trials, and 56 projects in Phase
I clinical trials.
-- During the first nine months of 2020, we signed 78 integrated WIND
packages with our customers, helping many of our customers submit their
IND packages for global filings and obtain CTAs under eCTD format.
-- We added over 440 new molecules into our small molecule CDMO services
pipeline. In addition to executing our 'follow-the-molecule' strategy,
we also won 25 phase II/III projects externally transferred from our
clients and their current CMOs. As of September 30, 2020, our small
molecule CDMO pipeline has grown to more than 1,100 active projects,
including 42 projects in Phase III clinical trials and 26 in commercial
manufacturing.
-- 4 WuXi STA sites passed China NMPA new drug pre-approval inspections
(PAI) at the same time. This PAI success marked a milestone for STA with
4 records: - It is WuXi STA's first drug product pre-approval
inspection. - It is the first regulatory inspection for WuXi STA's spray
drying commercial manufacturing facility and process. - This PAI is the
first comprehensive inspection for WuXi STA's integrated and end-to-end
CMC platform including both drug substance and drug product. - It is the
first PAI involving four WuXi STA sites at the same time.
-- As of September 30, 2020, our U.S. cell and gene therapies CDMO business
provided services for 33 clinical stage projects, including 22 projects
in Phase I and 11 projects in Phase II/III. As of end of third quarter,
2020, the backlog of our cell and gene therapies CDMO business increased
about 35% compared with the previous quarter. We expect about 2 to 3
products, including autologous cell therapy and allogeneic cell therapy
products, will file for BLA with the FDA in 2021, which may become a
significant growth driver for our U.S.-based laboratory services.
-- Our clinical research services continued to enable customers in China
and the U.S. During the reporting period: - SMO maintained its No.1
leadership position in China, with 3,100+ CRCs stationed in 145 cities.
CDS team was comprised of 810+ employees distributed in China and the
U.S. - The backlog of our clinical research services increased
significantly compared with the same period last year. As of September
30, 2020, the backlog of our CDS services increased about 100% and the
backlog of our SMO services increased about 45%. - SMO team assisted in
the market approval of 14 products for our customers, including the
approval of China's first biosimilar product in the European Union. CDS
team conducted 10 multi-regional clinical trials for our customers in
the U.S. and China.
Management Comment
Dr. Ge Li, Chairman and CEO of WuXi AppTec, said, "We once again achieved accelerated revenue growth in the third quarter of 2020. The strong performance of our China-based laboratory services and CDMO services, as well as the gradual recovery of our clinical research and other CRO services, mitigated the challenges faced by our U.S.-based laboratory services due to the COVID-19 pandemic. We are delighted to see that our platform and business performed very well and we continued to meet customer demand and project delivery schedules during the pandemic. Through the end of September 2020, we added over 900 new customers and our total number of active customers now exceeds 4,100."
"Our global enabling platform and 'Follow the Customer/Follow the Project/Follow the Molecule' strategy continued to perform very well. In the third quarter, our China-based laboratory services as well as CDMO services revenue growth accelerated compared with the second quarter and we continued to gain market share across different business units. Our clinical research and other CRO services realized revenue growth and our backlog increased significantly. In spite of the impact of COVID-19, the backlog of our U.S.-based laboratory services grew strongly quarter-over-quarter. In the future, we expect commercial manufacturing projects under our CDMO services segment to become a significant revenue driver. The Company's financial position is very strong. In September 2020, after raising HK$7.29 billion through the placement of new H shares, we completed the non-public issuance of 62.7 million A shares, receiving approximately RMB6.46 billion in net proceeds and providing the Company with a strong balance sheet for capacity expansion, especially for our CDMO segment."
Dr. Ge Li concluded, "We are grateful for the dedication of our employees and the partnership with our global customers, and remain committed to working with them to enable scientific and pharmaceutical innovation worldwide during this pandemic and beyond. Looking ahead, we will continue to invest in new capabilities and capacities that help our global partners bring groundbreaking medicines and treatments to patients in need, realizing our vision that 'every drug can be made and every disease can be treated'."
Reconciliation of Non-IFRS and Adjusted Non-IFRS Net Profit Attributable
to Owners of the Company
[5]
RMB Million
Three Months
Three Months
Nine Months Nine Months
Ended Ended Ended Ended
September 30, September 30, September 30, September
2020 2019 2020 30, 2019
--- ---
Profit Attributable to the owners of 651 708 2,368 1,765
the Company
---
Add:
---
Share-based compensation 138 26 413 89
expenses
---
Issuance expenses of 1 3 4 3
Convertible Bonds
---
Fair value loss from derivative 190 676 -
component of Convertible Bonds
---
Foreign exchange related 133 (6) 154 75
gains/losses
---
Amortization of acquired 9 7 26 20
intangible assets from merge and
acquisition
---
Non-IFRS Net Profit Attributable the 1,122 739 3,641 1,952
owners of the Company
---
Add:
---
Realized and unrealized gains (166) (85) (1,179) (140)
from venture investments
---
Realized and unrealized share 2 10 15 30
of losses of joint ventures
---
Adjusted non-IFRS net profit 958 664 2,477 1,842
attributable to the owners of the
Company
---
[5] If the sum of the data
below is inconsistent with
the total, it is caused by
rounding.
Condensed Consolidated Statement of Profit or Loss
[6]
RMB million
Three
Three
Nine
Nine
YoY
Months Months Months Months Change
Ended Ended Ended Ended
September September September September
30, 2020 30, 2019 30, 2020 30, 2019
Revenue 4,583.4 3,384.2 11,814.8 9,278.5 27.3%
Cost of services (2,818.7) (2,007.3) (7,391.6) (5,618.0) 31.6%
Gross profit 1,764.6 1,376.9 4,423.2 3,660.5 20.8%
Other income 62.6 53.9 190.6 178.8 6.6%
Other gains and losses (156.3) 76.9 565.5 54.4 939.9%
Impairment losses under (3.4) (8.9) (11.5) (10.0) 14.7%
expected credit losses ("ECL")
model, net of reversal
Selling and marketing expenses (136.3) (104.7) (410.8) (313.2) 31.2%
Administrative expenses (495.8) (376.7) (1,325.1) (1,047.9) 26.4%
Research and development (141.7) (170.7) (475.2) (414.3) 14.7%
expenses
Operating Profit 893.7 846.7 2,956.8 2,108.1 40.3%
Share of profits (losses)/gain (58.1) 62.2 (76.0) 135.2 -156.2%
of associates
Share of losses of joint (2.3) (10.0) (14.7) (30.2) -51.4%
ventures
Finance costs (47.2) (34.4) (158.0) (67.1) 135.4%
Profit before tax 786.1 864.5 2,708.1 2,146.0 26.2%
Income tax expense (126.5) (151.0) (321.0) (327.5) -2.0%
Profit for the period 659.6 713.5 2,387.1 1,818.4 31.3%
Attributable to:
Owners of the Company 651.2 708.4 2,368.4 1,765.1 34.2%
Non-controlling interests 8.4 5.1 18.7 53.3 -64.8%
659.6 713.5 2,387.1 1,818.4 31.3%
[6] If the sum of the data
below is inconsistent with
the total, it is caused by
rounding.
Condensed Consolidated Statement of Profit or Loss (continued)
[7]
RMB
Three Months
Three Months
Nine Months
Nine Months
YoY
Ended Ended Ended Ended Change
September September September September
30, 2020 30, 2019 30, 2020 30, 2019
Weighted average
number of ordinary
shares for the purpose
of calculating (express
in shares)
- Basic 2,331,527,982 2,284,510,663 2,299,443,602 2,284,292,357 0.7%
- Diluted 2,351,038,288 2,287,273,082 2,318,953,908 2,287,319,809 1.4%
Earnings per share
attributable to ordinary
equity holders of the
parent (expressed in
RMB per share)[8]
- Basic 0.28 0.31 1.03 0.77 33.8%
- Diluted 0.28 0.30 1.02 0.76 34.2%
[7] If the sum of the data below
is inconsistent with the total,
it is caused by rounding.
[8] In June 2020, pursuant to the
2019 Profit Distribution Plan
considered and approved by the
shareholders' general meeting,
the Company issued 4 shares for
every 10 shares of the Company
by way of capitalization of
reserve. In accordance with the
regulations of the China
Securities Regulatory
Commission, the Company has
adjusted the basic earnings per
share and diluted earnings per
share for the comparative period
according to the 2019 Profit
Distribution Plan.
Condensed Consolidated Statement of Financial Position
[9]
RMB million September 30, December 31,
2020 2019
Non-current Assets
Property, plant and equipment 9,007.5 7,666.0
Right of use assets 1,570.9 1,564.4
Goodwill 1,455.9 1,362.2
Other intangible assets 593.9 495.9
Interest in associates 777.7 768.3
Interest in joint ventures 49.0 25.2
Deferred tax assets 297.0 262.2
Financial assets at fair value through 5,812.7 4,009.1
profit or loss ("FVTPL")
Other non-current assets 584.3 62.4
Biological assets 375.2 360.3
Amount Due from Related Parties- 0.2 0.2
NonCur
20,524.3 16,576.1
Current Assets
Inventories 1,794.3 1,208.3
Contract costs 187.8 180.2
Biological assets 379.9 354.0
Amounts due from related parties 10.4 13.3
Trade and other receivables 4,342.2 3,555.9
Contract assets 510.0 379.4
Income tax recoverable 7.3 6.3
Financial assets at FVTPL 3,022.0 1,701.6
Derivative financial instruments 261.1 36.8
Pledged bank deposits 175.7 4.0
Bank balances and cash 13,299.7 5,223.3
23,990.5 12,663.0
Total Assets 44,514.7 29,239.1
[9] If the sum of the data
below is inconsistent with
the total, it is caused by
rounding.
Condensed Consolidated Statement of Financial Position (continued)
[10]
RMB million
September 30, December 31,
2020 2019
Current Liabilities
Trade and other payables 3,981.9 3,392.8
Amounts due to related parties 19.4 24.8
Derivative financial instruments 43.7 86.4
Contract liabilities 1,281.2 897.1
Borrowings 1,528.7 1,809.9
Lease liabilities 171.9 142.5
Financial liabilities at FVTPL 24.1 19.5
Income tax payables 301.9 261.4
7,352.8 6,634.4
Non-current Liabilities
Borrowings - 762.4
Deferred tax liabilities 239.2 231.1
Deferred income 681.7 667.4
Convertible bonds - debt component 1,881.1 1,874.9
Convertible bonds-embedded derivative component 948.8 298.0
Lease liabilities 1,116.2 1,104.7
Financial liabilities at FVTPL - 24.7
Other long-term liabilities 210.3 231.8
Total Non-current liabilities 5,077.3 5,195.0
Total Liabilities 12,430.1 11,829.4
Net Assets 32,084.7 17,409.7
Capital and Reserves
Share capital 2,442.0 1,651.1
Reserves 29,454.2 15,661.1
Equity attributable to owners of the Company 31,896.3 17,312.3
Non-controlling interests 188.4 97.5
Total Equity 32,084.7 17,409.7
[10] If the sum of the data
below is inconsistent with
the total, it is caused by
rounding.
About WuXi AppTec
WuXi AppTec provides a broad portfolio of R&D and manufacturing services that enable companies in the pharmaceutical, biotech and medical device industries worldwide to advance discoveries and deliver groundbreaking treatments to patients. As an innovation-driven and customer-focused company, WuXi AppTec helps our partners improve the productivity of advancing healthcare products through cost-effective and efficient solutions. With industry-leading capabilities such as R&D and manufacturing for small molecule drugs, cell and gene therapies, and testing for medical devices, WuXi AppTec's open-access platform is enabling more than 4,100 collaborators from over 30 countries to improve the health of those in need - and to realize our vision that "every drug can be made and every disease can be treated." Please visit: http://www.wuxiapptec.com
Forward-Looking Statements
This press release may contain certain "forward-looking statements" which are not historical facts, but instead are predictions about future events based on our beliefs as well as assumptions made by and information currently available to our management. Although we believe that our predictions are reasonable, future events are inherently uncertain and our forward-looking statements may turn out to be incorrect. Our forward-looking statements are subject to risks relating to, among other things, the ability of our service offerings to compete effectively, our ability to meet timelines for the expansion of our service offerings, our ability to protect our clients' intellectual property, unforeseeable international tension, competition, the impact of emergencies and other force majeure. Our forward-looking statements in this press release speak only as of the date on which they are made, and we assume no obligation to update any forward-looking statements except as required by applicable law or listing rules. Accordingly, you are strongly cautioned that reliance on any forward-looking statements involves known and unknown risks and uncertainties. All forward-looking statements contained herein are qualified by reference to the cautionary statements set forth in this section. All information provided in this press release is as of the date of this press release and are based on assumptions that we believe to be reasonable as of this date, and we do not undertake any obligation to update any forward-looking statement, except as required under applicable law.
Non-IFRS Financial Measures
We provide Non-IFRS gross profit, exclude the impact in revenue and cost from effective hedge accounting, share-based compensation expenses and amortization of intangible assets acquired in business combinations, and Non-IFRS net profit attributable to owners of the Company, which exclude share-based compensation expenses, listing expenses and issuance expenses of convertible bonds, fair value gain or loss from derivative component of convertible bonds, foreign exchange-related gains or losses and amortization of intangible assets acquired in business combinations. We also provide adjusted Non-IFRS net profit attributable to owners of the Company and earnings per share, which further exclude realized and unrealized gains or losses from our venture investments and joint ventures. We further provide EBITDA and adjusted EBITDA. Neither of above is required by, or presented in accordance with IFRS. We believe that the adjusted financial measures used in this press release are useful for understanding and assessing our core business performance and operating trends, and we believe that management and investors may benefit from referring to these adjusted financial measures in assessing our financial performance by eliminating the impact of certain unusual, non-recurring, non-cash and non-operating items that we do not consider indicative of the performance of our core business. Such Non-IFRS financial measures, the management of the Company believes, is widely accepted and adopted in the industry the Company is operating in. However, the presentation of these adjusted Non-IFRS financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with IFRS. You should not view adjusted results on a stand-alone basis or as a substitute for results under IFRS, or as being comparable to results reported or forecasted by other companies.
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